Question

The price that a person is willing to pay for a product or service is a good indication of a. the total cost of the resources used to produce all units of that product or service. b. the value of that product or service to another person. c. the price that all consumers should be willing to pay for that product. d. the value of that product or service to the buyer.

Answer 1

Answer: Option (d) is correct.

Step-by-step explanation:

The individual's willingness to pay for a product tells us about the value or worthiness of that good to that individual and people attached these value on the product according to the utility that they are getting from the product. So, firms observed these individual behaviors to set the price of a commodity or a good. They are trying to set prices below or equal to the willingness of the individuals.